What is a Medicare Advantage Plan?

It really hit home how frustrating Medicare is to seniors when a gentleman approaching 65 told me that learning Russian was much easier than understanding Medicare Plans. My experience has been that this is particularly true in understanding one’s choices with regard to Medicare Advantage Plans and how they compare to Medicare Supplements.

In the Research Triangle Area we are blessed with many excellent Medicare Advantage plans. With their zero or low premiums, it would be tempting to choose one without even considering the more expensive Medicare Supplements. However, they are not the best choice for all Medicare beneficiaries and there are a number of factors that must be considered before deciding if one of these plans is your best option.

Medicare Advantage Plans are also know as Medicare Health Plans or Part C.  They are managed by Medicare-approved private insurance companies and cover all benefits and services under Part A (which helps cover care in a hospital, skilled nursing facility, hospice or at home) and Part B (which helps cover services from doctors and other hospital providers, outpatient and home health care, some preventative services and durable medical equipment).  Although you can purchase a Medicare Advantage Plan without drug coverage, most have drug coverage (Part D). They often have extra benefits such as vision and dental reimbursements or free or discounted gym memberships.

Types of Medicare Advantage Plans are available in North Carolina?

Health Maintenance Organization (HMO) Plans: A Medicare Advantage Plan that provides all Original Medicare Part A and Part B health coverage and often covers Part D prescription drug coverage. They normally on pay for medical care from doctors and hospitals in their provider network (except in emergencies).

Preferred Provider Organization (PPO) Plans: A Medicare Advantage Plan that provides all Original Medicare Part A and Part B coverage and often covers Part D prescription drug coverage. PPO’s have a network of doctors and hospitals, but will pay the cost for you to go to providers outside of their network. However, usually your cost is higher.

Health Maintenance Organization Point-Of- Service (HMO-POS) Plans: This is a type of Medicare Advantage available in a local or regional are that combines the features of and HMO and PPO. It requires a designated in-network primary physician to be the primary health care provider. However,  policy holders can obtain care from hospitals and doctors outside of the provider network and pay a higher amount.

Medicare Special Needs Plan (SPN): A Medicare Advantage Plan that has a benefit package designed for people with special health care needs. Examples of specific groups served are include people who have both Medicare and Medicaid, people who reside in nursing homes and those who have certain chronic medical conditions.

Medicare Medical Savings Account (MSA): MSA plans combine a high deductible health plan with a bank account. The plan deposits money from Medicare into an account for the MSA policy holder. The policy holder can use funds from the bank account to pay for medical expenses until their deductible is met. Since the MSA available in NC covers Medicare Part A and B, but not prescription drugs, one must purchase a separate drug plan.

 

How does a Medicare Advantage Plan compare with a Medicare Supplement?

Here are five ways these plans differ:

  1. As the name implies, a Medicare Supplement “supplements” what Original Medicare does not cover. How much is “supplemented” depends on the plan you choose. For people turning 65 January 1, 2020 or later, plans range from a Plan G which covers what original Medicare does not cover except for an annual Part B deductible on Part B of $203 to a High Deductible G which has  the Part B deductible plus a $2,370  Part A deductible. If you want coverage like Plan G , then a Medicare Advantage would probably not fit your requirements. With Medicare Advantage Plans there are co-pays for most services(except preventative) and a serious illness can result in several thousands of dollars of out-of-pocket medical expenses.
  2.  From a monthly premium standpoint, Medicare Advantage Plans are generally much less expensive. Many have very low or zero premiums.  However, like a Medicare Supplement you must have Part B and continue to pay your Part B premiums.
  3. Unlike Medicare Supplements that are sold today, most Medicare Advantage Plans do have drug coverage.
  4. With most Medicare Supplements you can move to another state or county without changing to another Supplement. With a Medicare Advantage Plan you must find a new plan when you move to another state and sometimes even when you move to a different county.
  5. Medicare Supplements cover the medical expenses of their policy holders with any doctor, healthcare provider or hospital that accepts Medicare patients.  With a Medicare Advantage Policy (except for an emergency) one must adhere to network restrictions to prevent paying an additional amount or not being covered by the plan.

 

What questions should you ask before you purchase a Medicare Advantage Plan?

1. Are my doctors in the plan’s network?   It is important that the doctors you see frequently, such your primary care physician, are in the plan’s network. Although a PPO Medicare Advantage Plan will allow you to go outside the network, you are likely to pay a higher amount.

2. Are the hospitals in my area in the plan’s network?

3. Are my prescription drugs in the plan’s formulary (list of drugs that a drug plan covers) and what is the co-pay for each drug?  Although most Medicare Advantage Plans include a prescription drug plan, their formularies are different. One or two expensive drugs that are not in a plan’s formulary can result in a huge out-of-pocket expenditure.

4. What are the co-pays, costs or co-insurance for hospital stays, physician office visits, diagnostic tests, outpatient surgery, ambulance services and emergency room visits?

5. What is the maximum total out-of-pocket per year? Typically this should include the amount you spend on co-pays for doctor visits and hospital stays as well as the cost of ambulance services or emergency room visits, but would not include your prescription drug cost or co-pays.

6.  Does this plan offer reimbursement for eyewear, dental expenses and hearing aids?

7. Do I receive a gym membership at no cost or a reduced cost?

8. What is the “star rating” for this plan?  The federal government rates Medicare Advantage plans on a scale from one to five stars based on the quality and accessibility of care, consumer satisfaction surveys and other measures. Plans with three or more stars are given bonus government funding.

 Where can North Carolina residents get help choosing a Medicare Advantage Plan?

Government resources include the web site www.medicare.gov, a guide published by the Centers for Medicare & Medicaid Services named Medicare & You and the North Carolina Department of Insurance’s “Seniors’ Health Insurance Program” (SHIIP), which can be contacted via the web at www.ncshiip.com or  phone at 1-855-408-1212.

To save time and avoid aggravation you can contact a health insurance agent who is licensed to sell Medicare policies for numerous companies. This type of agent is called a broker.  Since they are compensated by the companies they represent you pay nothing for their expertise. They can help you sort through your myriad of choices to find the one that fits your needs and budget.